TUESDAY MORNING'S TOP STORIES

Pre-open moves

U.S. stock futures climbed on Tuesday, with the Federal Reserve expected to make an aggressive rate reduction. Investors are digesting results from Lehman Brothers and Goldman Sachs to assess the effects of the credit crisis on both firms in the wake of Bear Stearns collapse and sale.

U.S. producer prices rose 2.4% year over year in February, more than expected. Single family housing starts hit a 17-year low.

Federal Reserve

The Federal Reserve is expected to continue pulling out all the stops to combat the two-headed threat of a financial-market meltdown and a U.S. recession by slashing interest rates later Tuesday, Fed watchers said.

Bear Stearns downgraded German engineering giant Siemens AG
SI
to peer perform from outperform, saying it believes further bad news has yet to emerge following Monday's profit warning. The broker told clients that strains on Siemens' business execution are more significant than Wall Street expects. It added, however, that improved operational visibility and early benefits from cost cutting may emerge going into the fourth quarter. Also on Tuesday, Credit Suisse slashed its price target on Siemens to 98 euros from 110 euros, citing the profit warning that sent Siemens shares down 17% on Monday.

Lehman Brothers Holdings Inc.'s
LEH
fiscal first-quarter net income dropped 57% as results were hurt by net mark-to-market adjustments of $1.8 billion. Net income for the quarter ended Feb. 29 was $489 million, or 81 cents a share, compared with $1.15 billion, or $1.96 a share, a year earlier.

Chain-store sales for the week ended March 15 rose 1.6% from the year-ago period, according to a survey released Tuesday by the International Council of Shopping Centers and UBS Securities.

Treasury Secretary Henry Paulson said Tuesday that the U.S. economy is in a "sharp down climb," although economists differ over whether it is in recession. In an interview with NBC's "Today," Paulson cited "turbulence in our capital markets," but added that "we're all over it." He said the government's economic stimulus package could create between 500,000 and 600,000 jobs, and that the key task is to prevent turmoil in the markets from spilling over into the broader economy.

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